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LOOKING BACK: 5 YEARS OF AL GOVT

Living costs soar by 80pc

Shakhawat Hossain

Growing health, education and transport expenses have added to a major hike in food prices during the last five years pushing up the living costs to an unexpectedly high level especially in urban areas of the country.
A conservative interpretation of consumer price index of the Bangladesh Bureau of Statistics suggested that living costs had increased by around 50 per cent throughout the country since 2009 due to rise in prices of food and non-food items.
But actually the cost of living increased by 80 per cent each year over the period if one looks at the household income and expenditure survey also conducted in 2010 by the BBS.
For many, the second estimate appears more credible as it takes into account the sharp increase in the house rents, medical costs and transport fares.
The growing living cost occurred in contrast to the promises the present government had made in its election manifesto to keep the prices of food and non-food commodities within tolerable levels.
Finance minister AMA Muhith told New Age that the average per capita income had increased beyond $1000 for the first time in 2013, showing an improved performance in the country’s social sector and economy. 
Consumer Association of Bangladesh, however, said that monitoring
agencies had failed to check the price hike of essentials like clothes, toiletries, medicines, baby foods, bakery items and even contraceptives although the prices of these items on the international market tended to be stable.
CAB general secretary Humayun Kabir alleged that the government had failed to take action against the unethical practices of businessmen that had resulted in the price of onions reaching Tk 100 plus a kilogram last month.     
Economists said that by 2009, the record surge in prices of food on the international market was no longer a factor affecting prices on the local market and that when the Awami League-led government had assumed office in January of that year, it was blessed with the falling price of commodities on the international market.  
The prices of major food items like rice, edible oil, wheat and milk, however, reached high levels as was seen in 2008 after the government had increased the prices of diesel and kerosene by Tk 24 a litre and of petrol and octane by Tk 22 in five phases.
The prices were also affected by the average retail price of electricity which increased to Tk 6 a kilowatt-hour (unit) from Tk 3.76 in six phases since March 2010, due in part to the government’s controversial policy of power generation using costly oil guzzling rental power plants.
Former caretaker government adviser Mirza Azizul Islam said that despite the government’s record subsidy of Tk 12,356 crore for power and Tk 1538 crore for fuel oils in 2012-13, the energy price hikes affected every household.
The production costs of farmers who comprise 50 per cent of the country’s workforce, increased, he said.   
Bangladesh Institute of Development Studies research director Zaid Bakht said the price hike of fuel oils and power had influenced the growing living costs in the form of non-food inflation.
A single trip between Dhaka and Chittagong on a luxury coach now costs a passenger Tk 1200, an increase from Tk 800 or a rise by 50 per cent. A one-way journey between Dhaka and Khulna now costs Tk 1050 when in 2009 it was Tk 500.    
The rise in fares is what would be expected when ones takes into account increases in the prices of fuel oils, spare parts and labour costs, said an official of the Green Line Paribahan.
The government increased railway fares in October 2012 to Tk 0.36 per kilometer from previous Tk 0.24, a rise by 50 per cent. This was the first train fare hike in 20 years.
The state-run Bangladesh Inland Water Transport Corporation had also increased passenger fares by 35-40 per cent in the current year and, on the Dhaka and Barisal routes more than 90 per cent over the five years.
Rickshaw fares, according to anecdotal estimate, increased by about 200 per cent while the fare of auto-rickshaws and buses in the metropolitan cities rose by more than 100 per cent.
BIDS research director Binayak Sen said transport cost increases against the backdrop of poor service of the state-sponsored public transport system were ‘tormenting the city people’.
He pointed out that the successive governments had given almost no focus on this particular area.
He said fixed income group could not adjust to the high inflation compared to the rich and low income people, and was forced to reduce their savings.
Mustafizur Rahman, a service holder, said he used to pay Tk 7,500 in monthly house rent in the city’s Rampura area in 2009 but it rose to Tk 13,500 in 20013, marking a rise by 80 per cent.
He said his landlord had already informed him that the rent would be Tk 15,500 from next month.
Parvez Khan, owner of a pharmacy in the city’s Narinda, said prices of essential drugs had risen 100 per cent in the last five years, life saving drugs by 50 per cent and third generation antibiotic by 30 per cent.
Rashid-e-Mahbub, former president of Bangladesh Medical Association, said the sharp rise in healthcare costs was disappointing as the allocation to the health sector was 4.3 per cent  of the total budget outlay of Tk 222,491 crore, compared to 4.9 per cent in the last fiscal.
He said that middle income people were forced to depend on the government healthcare and had to share the allocation with the poor.
Parents said the government had no control of tuition fee increases made by the private educational institutions and that every passing year they had to pay at least 25 per cent more for readmission.
Guardians, many of whom belong to low income groups, alleged that public primary schools authorities were charging admission fees in violation of the rule of free education.
A planning ministry review report on the Sixth Five-Year Plan 2011-2015 recommended cuts in energy subsidy diverting the money to ‘health, education and social’ sector so that people were protected from price increases.
It said that resources allocated to the sector were ‘lower than needed to achieve the poverty reduction targets as those push up the living cost at a faster rate.’




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